Franklin & Marshall Caps Loans for Middle-Income Students

Worry is widespread that colleges are boxing out middle-income families, who are often referred to as too poor to pay full tuition but too rich to qualify for aid.

Franklin & Marshall College is dealing with that concern by creating a new program that will cap the federal loans it includes in the aid awards of students from middle-income families, the college announced on Thursday.

For the program, Franklin & Marshall is defining “middle income” as students who would qualify for up to $30,000 in its need-based grant aid. That amount of financial need corresponds roughly to a family that makes $100,000 to $160,000 a year, said Daniel G. Lugo, the college’s vice president and dean of admission and financial aid.

Attracting students in that income range, who used to be the “bread and butter” of colleges like Franklin & Marshall, is getting harder, Mr. Lugo said. “This is a national phenomenon for selective private colleges,” he said, “and we haven’t escaped it.”

In recent years, students in that range had been applying at lower rates, Mr. Lugo said. And the college’s yield rate (the share of admitted students who enroll) of students in the group had been lower each year.

Franklin & Marshall was unusually frank in its announcement that the program is an experiment designed to help it attract more students from a particular income band—and that the students could still take out more loans than the college packages for them.

The college has already tested the program, which will limit the loans in those students’ packages to a total of $10,000 over four years and replace additional loans with grants, with students who applied under regular decision to its current freshman class. That early test showed positive results: 19 percent of the entering class is middle income, up from 14 percent the year before.

Franklin & Marshall packages only subsidized Stafford loans for any of its students, which would result in a debt at graduation of $19,000, Mr. Lugo said. About 17 percent of the college’s incoming class qualifies for Pell Grants, which tend to go to students whose families make less than $50,000 a year.

For the next two entering classes, Franklin & Marshall will extend its limited loan offer to all qualified students, whether they apply regular or early decision. And the college will retroactively reduce the loans of current freshmen for those who applied early decision.

The college expects the pilot program to cost up to $1.8-million for the next two incoming classes and hopes to raise money to continue it in the future, and possibly offer it to a broader group of students.

Franklin & Marshall is not the first college to announce improvements in its aid for students in a particular slice of the income distribution. Last year the University of California at Berkeley announced that it would cap the parent contribution to its full in-state cost at 15 percent of income for families making $80,000 to $140,000 (tuition was already covered by grants for families making less than that). And dozens of colleges have eliminated or capped loans for some or all of their students.